Chapter 10 micro

A strategy

Amco Airlines decides to lower its price in response to UN Airlines' price reduction. In game theory, this response is:

information

Amco Airlines knows about UN Airlines' plan to hire a new CEO. In game theory, this knowledge is:

They can both easily enter and exit the market. They are both small relative to the market

How are monopolistically competitive and perfectly competitive firms SIMILAR?

They both face downward-sloping demand curves, they both have some control over prices

How are monopolistically competitive firms similar to monopolies?

Monopolistically competitive firms are small relative to the market.

How do monopolistically competitive firms DIFFER from monopolies?

Downward sloping and horizontal sloping.

How is the demand curve for a monopolistically competitive firm different from the demand curve of a perfectly competitive firm?

is a price maker

firm operating under monopolistic competition is DIFFERENT from one operating under perfect competition because a firm under monopolistic competition:

Oligopoly

An ________ industry has a few large interdependent firms

sequential

Chess in an example of a(n) _____ move game because each player must wait his or her turn to move and each bases decisions on what the other player did previously

Fat's Meats cheats and sells more kielbasa than it agreed, Fat's Meats could engage in non-price competition, One firm's cost of producing kielbasa could decrease.

Fat's Meats is part of the cartel that controls the kielbasa industry. Which of the following would cause instability in this cartel?

The firm should increase production

For a monopolistically competitive firm, if marginal revenue is greater than marginal cost:

Firm should decrease production

For a monopolistically competitive firm, if marginal revenue is less than marginal cost:

interdependence

Game theory explores the behavioral aspects of the _____ that is typical of oligopolies.

Dominant

Jilly's and Pizzazz, two competing hair salons, will advertise whether the other salon does or not. Both salons are using a _____ strategy.

lower prices and higher profit

Product differentiation can be the result of all of the following EXCEPT:

trembling hand trigger

This strategy reduces the misreads that can be a problem for the grim trigger strategy, but it can also be exploited by a clever opponent who figures out that he or she can get away with a few "mistakes" before the opponent retaliates.

Simultaneous

Two hardware stores deciding whether to advertise in this week's newspaper without knowing what the other store will do are engaged in a(n) _____ move game.

All of the firms agree upon a specific price and output for their products.

Which of the following describes a cartel?

attacking one of your enemy's ships every time the enemy attacks one of your ships

Which of the following is a tit-for-tat strategy?

not doing anything the first time an enemy attacks and waiting to see what it will do next

Which of the following is a trembling hand trigger strategy?

tit for tat strategy

Which of the following rewards cooperation and punishes defection?

Persuasive advertising

Influences consumers' emotions and tends to drive up costs of production

Informational advertising

Informs consumers about aspects of product and reduces search costs

Nash Equilibrium

It is the outcome that maximizes all players' expected payoffs given the information they have